LUBBOCK, Texas -- The dairy industry is in danger of collapsing as the COVID-19 pandemic continues. That's according to longtime farmers who say the industry is used to ebbs and flows - but not quite like this.
- Dairymen suffering with schools and restaurants closed during pandemic
- Some being required to reduce dairy production
- Some stimulus money reserved for agriculture aid
In a healthy economy the industry might see short-lived issues dealing with supply and demand, but the coronavirus is throwing a wrench in something else entirely: the supply chain. Ever since restaurants and schools shut down there’s nowhere for those products to go. Experts worry if the trend keeps up the industry will suffer.
"Right now, the future price has already been set for what May's milk is going to be and that will carry over to June as well. Those prices are well below the cost of production for dairymen right now, so they won't even get paid enough to cover what it took to make the milk," said Darren Turley of the Texas Association of Dairymen.
Last month Congress did pass a $2 trillion stimulus rescue package. In that package roughly $23 billion is reserved for agriculture aid. Over at Stonegate Farms in the Texas Panhandle, farmers are hoping more help is on the way.
“We’re currently milking 3,000 milk cows twice a day,” said farm co-owner Joe Osterkamp.
Stonegate Farm churns out about 28,000 gallons of raw, unprocessed milk per day.
“All of that goes out to a processing plant. There’s multiple different kinds of processing plants. There’s cheese processors, there’s powder processors, butter, cream - you go down the line any dairy product there’s different processors that it’s going into,” said Osterkamp.
With the shakeup in the supply chain, farmers like Osterkamp are bracing for even more bruising.
“We did receive word from our milk procurers co-op. We’re being required to cut our daily production by 10 percent. When we heard that 10 percent number it was kind of a shock, it was like whoa, we’ve never had to do something like this before," he said.
How do you make 3,000 cows produce 10 percent less milk? It simply doesn't work that way. These challenges are forcing dairymen to think about how to achieve that 10 percent reduction.
“It’s gonna be a combination of things. We’re going to be changing our feed rations, changing them to get our cows to produce a little less milk. We’re gonna dry some cows off early. The pregnant cows are gonna go out and rest a little earlier than we normally would. Sell some cows off, things like that,” Osterkamp said.
The dairy industry is unique in that hitting the brakes just isn’t an option.
“An oil field they can stop pumping and stuff. We just can’t do that. These animals, they’re constantly producing milk and there’s no way to tell the cow okay it’s time to stop producing milk,” Osterkamp laments.
Which means for many in agriculture, the only light at the end of the tunnel would be the end of the economic shutdown and restaurants and schools opening their doors again.
“Because if part of that chain isn’t able to take or do what they normally do it just backs up all the way through the production cycle,” Osterkamp said.
Among the cash in the $2 trillion rescue package, more than $9 billion was also reserved for the USDA.